by Brian de Lore
Published 3rd April 2020
Racing Minister but more poignantly Foreign Affairs Minister Winston Peters, who turns 75 tomorrow week, was talking-up a post-COVID-19 pandemic economy for New Zealand in the press earlier this week.
He was comparing our current predicament to that of the Great Depression of the 1930s in the USA from which the then-President Franklin Roosevelt with his New Deal turned things around and made the USA the most powerful economy in the world.
The USA in the 1930s had the scale New Zealand lacks, however, and no constrictions from an economy dependent on tourism and trade with China. Scale is racing’s most crucial issue with an administrative mindset shown to be reluctant to join a globalised wagering market and bring in the New Deal for New Zealand’s racing future.
Since the Messara Report was released two years ago this July, its author John Messara has openly emphasised the importance of recommendation number seven: “Begin negotiations for the outsourcing/partnering of the TAbs commercial activities to an international wagering operator to gain significant advantages of scale.”
“Begin negotiations for the outsourcing/partnering of the TAB’s commercial activities to an international wagering operator to gain the significant advantages of scale.” – recommendation seven, Messara Review
Messara has consistently stated that without the implementation of this recommendation, you may as well bin the others. He emphasised the importance of adopting all 17 as a suite of remedies that were not for cherry-picking.
Minister Peters acknowledged the Messara Review at its launch by saying he didn’t commission an Australian expert to ignore the advice. And in appointing MAC/RITA, it was clearly the intention of the Minister to adopt the Messara Review and RITA’s instructions in the ‘Terms of Reference’ to operationalise it.
However, RITA’s actions haven’t reflected the recommendations of the Messara Review or displayed an inclination to seriously investigate the prospect of outsourcing/partnering the TAB. Establishing that the ownership of the TAB resides with the codes, would enable outsourcing/partnering to commence as part of a major restructuring of the industry.
In a text to the Minister earlier this week, my request for a discussion on the subjects of ‘ownership of the TAB, the progress of the legislation, and racing post-COVID-19 and RITA,’ was rhetorical as much as hopeful of a return text.
Winston Peters: It is likely the racing bill will face delays
But a response did arrive by email in which Peters said: “It is likely the racing bill will face delays. Parliament is not sitting because of the alert level and all parliamentary business is slower as a consequence. Timelines have to be taken with a grain of salt. The bill is before the select committee for consideration, and ultimately the committee members will determine the timing.
“The existential threat for racing at present, like all New Zealand industry and sport, is surviving the economic consequences of COVID19. And being in a fit state to pick up the reins when the time comes.
“RITA is a commercial operation and its leadership has been taking the necessary commercial decisions. The Government has been doing its bit. The wage subsidy scheme – which is likely to cost up to 12 billion dollars overall – is being utilised by many in racing. The Government will consider other measures as well, but no further decisions have been taken so far.”
Peters made no mention of the ownership of the TAB, however. For the past month, he has been in possession of and conducting due diligence on, a copy of the 1950 document ‘Off-Course Betting Scheme’ which outlines the formation of the TAB and conclusively determines the NZ Racing and Trotting Conferences started the TAB with the approval with the Minister of Internal Affairs.
In an ideal world, the Minister would publicly state the codes to be the true owners of the TAB
In an ideal world, the Minister would publicly state the codes to be the true owners, and the matter put to bed once and for all by having it written into the Racing Reform Bill. That would stop the tail wagging the dog as it has done for many years, place the codes in a position to commence outsourcing/partnering which is the main source of revenue to rescue this now destitute business.
Even the COVID-19 pandemic, which is a dagger in the side of an already crippled racing industry, hasn’t been enough to move racing administrators to look at reducing costs seriously. In particular, to follow other industries with which have adapted with significant pay cuts and downsizing to skeleton staffing.
Consider a week’s worth of news: Woolworths and Michael Hill Jewellers announced 9000 job losses between them; Job losses in New Zealand may number 67,000; Radio Sport is no more; Air New Zealand is letting go around 3,500 staff; MediaWorks is asking all staff to take pay cuts, Newstalk ZB and The New Zealand Herald is warning of job losses; Forestry is saying 4,000 logging jobs are going; Bauer has just closed its NZ operation with the loss of about 250 journalists.
What’s RITA doing? This is what the Executive Chairman of RITA, Mr Dean McKenzie, said in his latest Update dated April 2nd: “I’ve spoken previously of the steps the TAB has taken to cut costs and we continue to maintain this focus. The Board and executive management team have taken pay cuts and a significant number of the organisation’s staff are voluntarily taking leave, while in some cases we’ve had to ask staff with high leave balances to use them”
In an organisation more top-heavy than Humpty Dumpty…
In an organisation more top-heavy than Dolly Parton, McKenzie’s statement says nothing about staff reductions or how much the pay reductions are – if they were significant they would be stated.
Saying “…while in some cases we’ve had to ask staff with high leave balances to use them,” is bordering on pathetic. Further evidence of McKenzie’s inability to show decisive and strong leadership in a desperate financial situation where most properly run businesses have leaders who make morally responsible decisions in the best interests of industry stakeholders.
Even worse is what McKenzie wrote in his opening paragraph. He said, “the overwhelming message I’ve heard is that the measures in place provide us with the best opportunity to return to normal – even if it’s clear that it will be a ‘new normal.’
McKenzie needs reminding that in this calamitous epoch, where cash is king, RITA is indebted to the bank for $45 million! The last thing we want to do is a return to normal or what McKenzie’s idea is of a ‘new normal.’ Today’s normal or reality is that we are a racing industry with no racing and only a small percentage of our usual income. We are also a racing industry that between the codes and RITA costs ~$250 million annually, and they’re acting as though its business as usual – it’s lunacy.
Look at the situation in more simple weekly terms. The average running costs of the racing industry (RITA + codes) is $4.5 million a week. Even with a booming week last week at $3.7 million (GBR) the industry went backward by a further $800,000.
Without brutal cost-cutting, if racing in Australia stopped because of COVID-19, the industry without The Championships to bet on is bankrupt within a week. Racing’s inability to react quickly in this dire state of the current economics could mean our industry becomes the most spectacular casualty of all the sports – nearly all of which has been man-made.
Three years ago, when the NZRB 2017 Annual Report was released, cash on hand and assets amounted to $38 million. Winston Peters became Minister but the big-spending of CEO John Allen on the FOB was already set in stone. Less than three years later, racing has no tangible assets of any value and owes the ASB (new bankers for whatever reason) $45 million – how was this allowed to happen?
